What happens if your primary residence is outside Australia?

Andrew lives in Singapore but owns a property in Sydney and wants to know how the assets test will be applied.

Q. Andrew
I note that the family residence is excluded from the assets test to qualify for the pension.

My wife and I have only one property in Australia, a home unit in Sydney, which we purchased in 1988 and lived in as our primary residence until 1993 when work took us overseas to Singapore where we remain until today.

The Sydney unit has been rented from 1993 until today. Meanwhile, our primary/family home is in Singapore – purchased in 1993/94 and we have lived in this apartment ever since.

Read: How your superannuation affects the Age Pension

Question: For the purposes of the pension assets test, can my primary residence be outside Australia, or do I not have a primary residence? Thanks for your consideration.

A. The first thing you need to know is that it is only possible for Australian residents to claim the Age Pension.

That means you must return to Australia for a period of two years to be able to claim the pension.

Read: Major changes to Centrelink payments announced

You also have to have lived in Australia as a citizen or permanent resident for a continuous period of 10 years, or for several periods that total over 10 years and include a continuous period of five years. It sounds like you have probably met that requirement.

Even if you do return to Australia for two years and then return to live in Singapore after your pension becomes portable, you may find that the rate is reduced.

This is because overseas pension payments are assessed using the Australian Working Life Residence (AWLR) rule, which is the length of time during your working life that you were resident in Australia.

Read: How selling and downsizing affect your Age Pension

If you have lived in Australia for 35 years (420 months), then you are paid the full rate of Age Pension to which you are entitled. If, for example, you have only resided in Australia for 20 years, then you will be paid 241/420 of the Age Pension (20 x12 plus an extra month).

So, to get around to answering your original question, you will need to move to Australia to submit your claim for the Age Pension.

If you do this, and assuming you are able to break the lease agreement to live in your Sydney apartment for the next two years, your property in Singapore will be assessed as an asset while you are living in Australia.

If you choose to return to Singapore after two years of living in Australia, your property in Singapore will become your primary residence and will be an exempt asset, but your property in Sydney will then become an assessed asset and any rental income you earn from it will be included in the income test.

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Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a Centrelink Financial Information Services officer, financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

Written by Ben



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